A fraudster convicted of running an investment scam emerged from prison as a pastor who targeted Orange County’s Vietnamese community in a $25 million Ponzi scheme, alleges the Securities and Exchange Commission.
After the SEC announcement was made Tuesday, a court appointed federal equity receiver and his Costa Mesa-based counsel revealed they are seeking the public’s help in finding victims, who are also believed to be residing in San Jose and Chicago.
Former Chicago options trader Kent R.E. Whitney was sentenced Dec. 8, 2011, to 44 months in prison after having pleaded guilty to wire fraud three months earlier, according to the U.S. Attorney’s Office for the Northern District of Illinois. He had swindled more than $600,000 from around 10 victims who invested with him.
The SEC alleges in the latest complaint that Whitney founded The Church for the Healthy Self three months after being released from federal prison in 2014. His LinkedIn page lists one of his previous Chicago companies, CME Group, and his church, without mentioning the stretch behind bars in between those two stops.
His supposedly nonprofit, religious organization did not hold services but operated as a “virtual church” with its website linking to online prayer request forms and YouTube videos with spiritual messages from Whitney, according to the SEC.
David Lee Parrish, who assisted Whitney’s earlier fraud, was co-pastor of The Church for the Healthy Self and the director of CHS Trust, both of which operated out of a Little Saigon storefront, according to the SEC, which is seeking permanent injunctions, disgorgement and civil penalties against both defendants.
The government says investors were lured through extensive radio and television advertisements touting CHS Trust, with one such commercial–that ran in Vietnamese with English subtitles–having stated: “Hello, I would like to introduce you to an investment program earning 12 percent interest from CHS Trust. Safe, effective and insured by FDIC and SIPC. CHS Trust investment program gives you higher interest than 401(k) or IRA with maximum tax benefits. Register for a free seminar to learn about the 12 percent interest rate program at CHS Trust every Wednesday at 6 p.m.”
Instead of generating the promised guaranteed profits, Whitney and Parrish used investor funds to pay credit card bills, student loan bills, title and mortgage companies, jewelers and a home staging and interior design firm, alleges the SEC, which accuses the pair of continuing to solicit customers after the FBI seized the funds in CHS Trust’s main account due to potential violations of federal wire fraud and money laundering statutes.
Authorities have so far seized around $4.3 million in assets but as much as $40 million may have been stolen by the defendants, says Kyra Andrassy, a partner at the Smiley Wang-Ekvall firm, who is helping court-appointed federal equity receiver Robert P. Mosier find all the victims of CHS Trust and The Church for the Healthy Self.
“It’s very sad—it appears that some people gave their life savings thinking they were making a safe investment with an organization that claimed the investments were backed by the FDIC and SIPC and associated with a legitimate, tax-exempt church,” Andrassy says in a statement from Smiley Wang-Ekvall. “Unless we uncover a lot more funds and assuming the amount invested is as we suspect, these victims stand to get little money back.”
While there may have been a smattering of legitimate investments, it appears that any payouts or returns came from more recent investors, Andrassy claims. “CHS made it appear as if there was a legitimate entity, and if you go to the church’s website, there is a button to donate and even a staffed phone prayer line.”
OC Weekly Editor-in-Chief Matt Coker has been engaging, enraging and entertaining readers of newspapers, magazines and websites for decades. He spent the first 13 years of his career in journalism at daily newspapers before “graduating” to OC Weekly in 1995 as the alternative newsweekly’s first calendar editor.